Aug. 14 (Bloomberg) -- Caesars Entertainment Corp. reached
a deal with the trustee of first-lien bonds that would
facilitate negotiations with holders of those notes because it
provides incentive to delay a potential notice of default.

The casino operator announced a waiver agreement with UMB
Financial Corp., which was named the trustee of almost $5
billion of first-lien bonds on July 30, that’s aimed at keeping
those noteholders engaged in discussions, according to a
regulatory filing today.

The agreement may discourage bondholders from alleging a
default until Sept. 19 because any notice filed on that date or
later would only give the Las Vegas-based company 10 days to
comply with its credit pact, according to the filing.
Ordinarily, Caesars would have 60 days to address a violation,
so the deal would give it less time before creditors can
expedite claims.

A notice served between now and Sept. 19 would be treated
as though it were dated Aug. 12, according to the filing. One
filed more than 120 days after then, the date of the agreement,
won’t have the benefit of the deal.

“The first-lien creditors are being allowed to not give up
anything just to stay at the table,” Noel Hebert, an analyst at
Bloomberg Intelligence, said in a telephone interview. “This is
a move by the company to keep people engaged.”

Replaced Trustee

Caesars, taken private by Apollo Global Management LLC and
TPG Capital in a $30.7 billion leveraged buyout in 2008, is
battling with its creditors as it seeks to rein in interest
expense that exceeds its cash flow. The casino company, which
has more than $20 billion in debt, replaced U.S. Bancorp as the
trustee overseeing eight of its bond issues.

UMB is a trustee for the company’s $2.1 billion of 11.25
percent notes due June 2017, $1.25 billion of 8.5 percent notes
due 2020 and $1.5 billion of 9 percent bonds maturing in the
same year. A bond trustee enforces the contracts that govern
fixed-income securities and makes sure interest payments are
made on time.

“We are continuing to work with responsible creditors to
improve the company’s financial situation and future
prospects,” said Stephen Cohen, a spokesman for Caesars at
Teneo Holdings in New York.

Caesars already received a notice from its second-lien
bondholders in June and the trustee for those creditors,
Wilmington Savings Fund Society, sued the company in Delaware
Chancery court in Wilmington earlier this month.

On Aug. 12, the company also cut a deal with some of its
unsecured bondholders who hold bonds issued by its largest
operating unit. Those creditors would be repaid a portion of
their holdings at close to par in exchange for securing their
approval to take part in a restructuring of those notes within
six months. The move also included a cancellation of some of
those notes held by other entities of Caesars, cutting its total
indebtedness by $548.4 million.